The control of fetal lung development was studied by examining the number and properties of specific insulin receptors in freshly isolated fetal rate lung, lung organ culture, and primary type 11 pneumocyte culture. Insulin receptors are down-regulated by 50 percent in fetal lungs of streptozotocin-induced diabetic pregnancies. Insulin receptors in fetal lung organ culture were also shown to be down-regulated in the presence of insulin. This down-regulation was demonstrated to be coupled to a biological effect of insulin, hexose transport. Insulin receptors in organ culture could be up-regulated by removel of insulin or by the addition of hydrocortisone. Primary type II pneumocytes were shown to possess specific receptors for insulin, while lung fibroblasts exhibited very little capacity for insulin binding.